SAN FRANCISCO (LN) — U.S. District Judge Rita F. Lin ruled Wednesday that the State of California’s lawsuit challenging Department of Energy grant terminations will proceed in part, interpreting 28 U.S.C. § 1491(d)(4) to stay only the specific claims Defendants seek to transfer to the Court of Federal Claims.
The State of California and other plaintiffs sued to block a 2025 Department of Energy memo and the resulting termination of grants funding energy projects.
Defendants moved to sever and transfer the claims challenging the grant terminations to the CFC, while asking the court to dismiss the remainder of the claims that challenge the DoE memo itself.
In their motion, Defendants argued that the claims “cannot travel together through the federal courts,” citing Justice Amy Coney Barrett’s concurrence in National Institutes of Health v. American Public Health Association.
Judge Lin determined that while the statutory language of Section 1491(d)(4) is ambiguous regarding partial transfers, the legislative intent to “avoid[] wasteful and duplicative litigation on the merits trial court” supports a limited stay.
The court ruled that the provision is best read to temporarily stay only the portion of the action subject to the transfer motion. This approach prevents the risk that merits will be litigated court while ensuring the “timely resolution of claims that everyone agrees should proceed in the district court.”
Lin noted that accepting Defendants’ broader interpretation—staying the entire action—would lead to “absurd results.”
If the CFC were to take the transferred claims, the remaining claims in the district court would proceed alongside the CFC case in “two-track litigation,” the judge wrote. Therefore, staying the non-transferred claims pending the transfer motion serves no one.
The court also rejected Defendants’ alternative argument that only the plaintiffs’ ultra vires claim could proceed while other non-transferred claims challenging the DoE memo were stayed.
“Because the Court must reach the merits as to the remaining portions of all of Plaintiffs’ claims, regardless of the outcome of the motion to transfer, the claims are not stayed,” Lin wrote.
Accordingly, proceedings including discovery are automatically stayed only with respect to the portions of claims subject to the transfer motion. Proceedings are not stayed for claims challenging the DoE memo or the plaintiffs’ ultra vires claim.
The judge denied a separate administrative motion by Defendants to stay their deadline to respond to written discovery requests served on April 22, 2026.
Lin ruled that to the extent discovery requests pertain solely to the stayed portion of the action, they are moot. For the non-stayed portions, she found no cognizable hardship or burden warranting an extension that would “disrupt the existing case schedule unnecessarily.”
The parties must meet and confer regarding the scope of discovery and the administrative record in light of the order.